Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Accepted
DWP revises down estimated State Pension underpayments impacting 165,000 pensioners by £260 million.
Conclusion
We have reported previously on the historical underpayment of State Pension due to errors by DWP affecting some pensioners who are married, widowed or over-80, most recently when we examined DWP’s 2021–22 Annual Report & Accounts. During that inquiry DWP told us it estimated that 237,000 pensioners had been underpaid around £1.46 billion due to human error going back decades.25 DWP’s best estimate is now that 165,000 people have been underpaid a total of £1.2 billion.26 This remans in line with the range of uncertainty that DWP previously set out.27
Government Response Summary
The government agrees with the Committee’s recommendation and provided details of the scope of the exercise and plans to address outstanding work in its 2022-23 Annual Report and Accounts. It will provide updated details of its plans in its 2023-24 Annual Report and Accounts.
Government Response
Accepted
HM Government
Accepted
4.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2024 4.2 The department provided details of the scope of the exercise and plans to address outstanding work in its 2022-23 Annual Report and Accounts. The 2022-23 Annual Report and Accounts also sets out that there is a degree of uncertainty with the number of people affected and the total amount of pension arrears. The correction exercise began in Autumn 2023. The department will continue to refine its plans and timetable alongside HM Revenue & Customs (HMRC) as the exercise progresses. The department will provide updated details of its plans in its 2023-24 Annual Report and Accounts. 4.3 Income tax will be calculated on the arrears payments of State Pension for the tax year in which the customer was entitled to receive the State Pension, not in the year in which the arrears were paid. HMRC will only collect tax for the year that arrears are paid and the preceding four years. HMRC will not collect income tax on any arrears payments where the individual is deceased, and payment was made after the date of death. HMRC will not raise historical interest charges on the tax due from Self-Assessment customers.